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Hypercompetition - Essay Example
Pages 4 (1004 words)
Perfect competition and sustainable profits may have gone the way of the horse drawn carriage. A reduction in barriers, new technology, and innovation has brought about fierce fighting for a select market share. It now requires a "continual, radical innovation" to maintain a competitive advantage (New rules 2002)…
Creating and protecting a market position is beneficial if the competition is sparse, or the firm has a unique product that gives them supplier power. However, if a profit is being made on the product, it will attract competitors and innovators will find substitute products (Sull & Escobari 2004 p.15). It may take substantial resources through advertising and customer service to maintain a position in a fluid market (Day & Reibstein 1997 p.52). It may be easier to create a new opportunity than it is to protect an old position. However, new opportunities require resources.
Amassing resources can be a definite advantage. However, the value of these resources may erode if other firms can easily acquire them (Day & Reibstein 1997 p.312). A firm needs to evaluate all its resources. Garelli (2006) states, "Competitiveness thrives increasingly on intangible assets that are difficult to value, to account for, to create, and to recover" (p.4). Firms can maximise their competitive edge by utilising their intangible assets as well as they can any other raw material. These resources may be easier to protect than a superior market position. However, in today's hypercompetitive market competitors are quick to take your intangibles such as innovations, employees, and market share.